Utah Opportunity Zones
Welcome to South Ogden City and thanks for taking an interest in learning about the city’s willingness to be an active participant in helping to maximize the benefits of redevelopment in South Ogden, both for the city and investors. This brochure has been designed to help investors understand how to take advantage of federal investment incentives within designated Opportunity Zones in South Ogden. For additional information regarding developing within South Ogden or the Opportunity Zones program please contact Matt Dixon, City Manager, at 801.622.2707 or at mdixon@southogdencity.com. Sincerely, Russ Porter Mayor
Utah Opportunity Zone De Definitio ion – an economically distressed area where new investments, under select conditions, may be eligible for preferential tax treatment through an established opportunity fund – U.S. Treasury Pur urpose & In Intent – an economic development tool – to spur economic growth and job creation in distressed communities by providing tax benefits to investors - U.S. Treasury Gen General l Tax Provisio ions: 1) Tem 1) emporary ry de deferral l of capital gains taxes until 2026 by allowing investors to put and keep unrealized gains in an opportunity fund 2) A te ten per percent reduction on deferred taxes on capital gains if the opportunity fund is held for five years, and ano another fi five per percent red eduction if held for seven years 3) A com omplete tax exemption on capital gains on investments made through the opportunity fund as long as the investor holds the investment for ten years
Utah So South Ogden Opportunit ity Zone Option I Option II Example le
Utah Opportunity Zone Option I Non-Opportunity Zone Option II • • $10,000,000 roll of capital gains into an opportunity fund $10,000,000 roll of capital gains into a NON opportunity zone area • • Capital gains tax is not required until year 7 following Immediate capital gains tax = $2,000,000 rollover • • Capital gains following 15% opportunity zone New investment is sold in ten years • adjustment = $1,700,000 New value = $20,000,000 • New capital gains taxes = $2,000,000 • New investment is sold in ten years • • New value = $20,000,000 Total capital gains = $4,000,000 • New capital gains taxes = $0 • Total capital gains = $1,700,000 Difference = $2,300,000 (not including state capital gains taxes and additional benefits from gains on debt!)
Utah Opportunity Zone Option I Non-Opportunity Zone Option II • • All else equal, a developer/investor has $2,300,000 in All else equal, sites not in Opportunity Zones will be less additional value incentives to develop/invest in an competitive for investment dollars Opportunity Zone (per the previous example) • To attract tenants, the financial advantage could be partially utilized by providing superior construction to competitive sites • A reduced initial rent (or more tenant incentives) could be offered to be competitive to other, non- Opportunity Zone sites • Tenants can also invest in the Opportunity Zone and receive similar savings for job expansion and business growth
Utah South Ogden CRA Survey Areas within the Opportunity Zone Riverdale Road Washington Blvd. 40 th Street
Utah Steps South Ogden will take to Capitalize on Opportunity Zones • Create CRA’s to provide additional incentives • Educate property owners on the advantages of an opportunity zone • Have zoning and plans in place that allow for ready development processes at the densities and use types that are desired by the city and development community • Market to investors the development options and incentives that are possible and ready within the Opportunity Zones • Market to potential tenants the advantages of an Opportunity Zone
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